This paper examines the impact a whole-farm adjusted gross revenue insurance program (AGR-Lite) has on farm income variability of Southeast Kansas beef farms. A panel data set of actual farm level income data for the period 1993 to 2007 was used to evaluate the impact of AGR-Lite on farm income risk reduction for fifty-nine Southeast Kansas beef farms. Two income distributions for each farm were calculated. One assumed the farm did not insure with any product and the other assumed the farm used AGR-Lite as a stand-alone product. The income distributions were examined using Stochastic Efficiency with Respect to a Function (SERF) analysis. The AGR-Lite program, on average for the group, reduced net farm income, standard deviation of net farm income, coefficient of variation of net farm income, the maximum observation in the distribution, and raised the minimum observation in the distribution. However, the results also reveal that AGR-Lite was preferred at some level of risk aversion on only twenty-two farms. Thirty-seven of the fifty-nine farms do not prefer AGR-Lite under any level of risk aversion. Seven of these thirty-seven farms receive one indemnity payment, three of the farms receive two, and one of the farms receives three indemnity payments. The remaining twenty-six farms that did not prefer AGR-Lite did not receive an indemnity payment.
|Conference||2009 National Extension Risk Management Education Conference|
|Presentation Type||30-Minute Concurrent|